In a 3 to 2 decision this morning, the FCC Commissioners voted to accept Chairman Wheeler’s proposal for the modernization of the E-rate program. The proposal emphasizes reconfiguring the E-rate program to focus on promoting broadband connectivity both to and within eligible locations. You can find a press release from the FCC regarding the Order here.

Under the accepted changes, $2 billion will be set aside for Wi-Fi equipment in Funding Years 2015 and 2016, distributed using a modified discount matrix that includes a cap on funding requests. These funding years will mark only the third and fourth times in the history of the E-rate program that funding for network equipment will be available for all eligible entities. It will be paramount for E-rate applicants to make good use of this opportunity.

Further adjustments to the program include:

  • allowing multiple-year funding applications for services under 5 year contract
  • prioritizing the review of consortia applications
  • eliminating the requirements for technology plans
  • extending document retention requirements to 10 years
  • relaxing bidding requirements for some low-dollar amount applications
  • requiring electronic filing of forms
  • allowing direct reimbursement of funds to applicants
  • phasing out eligibility of legacy non-broadband telecommunications services
  • adding Wi-Fi service and caching servers to the E-rate eligible services list
  • limiting the maximum discount rate for Wi-Fi equipment to 85%
  • requiring school district applicants to use the average discount rate of the entire district, rather than per site discount rates
  • redefining the “rural” site designation
  • requiring applicants to consider “preferred” contracts in their bid evaluations

The impact of the reform adjustments on the E-rate program will become clearer as the new rules are codified and a new Eligible Services List for Funding Year 2015 is released this fall. It is likely that these changes will substantially affect the planning, procurement strategy, technology budget and timeline for most E-rate applicants.